American Express

90 Hudson Street
Jersey City, NJ 07302
(212) 640-2000

American Express headquarters, New York. Reproduced by permission of Getty Images.
American Express headquarters, New York.
Reproduced by permission of Getty Images.

American Express was originally a shipping outfit founded in New York by Henry Wells and William G. Fargo (1818-1881) in 1850. Within a few short years, the company became one of the most trusted and reliable names for safely transporting valuables in the United States. Wells and Fargo went on to form other companies, both together and separately, and were responsible for advances in the shipping, banking, and telecommunications industries.

Today, American Express is the world's number-one travel service organization, serving customers from over eighteen hundred offices around the globe. The company is best known for its popular and distinguished charge cards and Travelers Cheques. With American Express charge cards, you can go anywhere in the world and spend money without actually carrying a single dollar in your pocket.

Conquering the Shipping Industry

Henry Wells and William Fargo both found their way into the shipping business by the early 1840s. Wells had dabbled in various fields, but found he enjoyed shipping and messenger services the best. He first worked for Harnden Express Company, which was the first express company in the United States. An express company was responsible for safely transporting money and other valuable goods.

In 1841, Wells struck out on his own to form Wells & Company, with partner Crawford Livingston. William Fargo worked for the company as a messenger. The two men had similar ambitions and by 1850, along with several competing businessmen, they organized the American Express Company. With an initial investment of only $150,000, Wells and Fargo immediately made bold plans to capture the express shipping business along the eastern seaboard of the United States. Wells served as the company's first president; Fargo was vice present.

Since American Express was established in New York City, right on the waterways of the Hudson River and Long Island Sound, it was a prime location for shipping goods by steamer (larger ship) or barge (smaller, flat-bottomed boat). Wells and Fargo, however, did not intend to ship goods only on the waterways; they also made agreements to use the steadily growing rail system in New York and the Midwest. Other companies had the same idea, so in order to remain on top, American Express bought small competing firms, adding their contracts and travel lines to its own. One of the firm's chief rivals was Adams & Company. Adams became such a business threat that the two companies agreed not to invade each other's territory and to expand in separate directions.

American Express at a Glance

  • Employees: 89,000
  • CEO: Kenneth I. Chenault
  • Subsidiaries: American Express Bank; American Express Financial Corporation; American Express Publishing; American Express Sharepeople; American Express Tax and Business Services;
  • Major Competitors: Bank One; Citigroup; John Hancock Financial Services; MasterCard; Merrill Lynch; Visa

Looking West

American Express believed one way to stay ahead of its rivals was to provide more services to its customer. The company expanded by offering a variety of financial and banking services in addition to its express shipping. Although they were rapidly becoming successful, Wells and Fargo wanted more. Their dream was to turn American Express into a national business. To do so, they looked to the West, especially California. California had recently joined the union in 1848, and gold had been discovered. Americans were flocking westward to stake claims and get rich. Wells and Fargo knew these prospectors would need the kinds of services offered by American Express.


Henry Wells and William Fargo form the American Express Company.
Wells and Fargo create Wells, Fargo & Company.
American Express and Merchants Union Express merge.
First Travelers Cheques are offered.
While hundreds of banks fail during the Depression, American Express stays open.
American Express personal charge card is launched.
America Express Gold Card is introduced.
American Express card for companies is launched.
Optima card is introduced to challenge MasterCard and Visa.
Company purchases France's largest travel service, Havas Voyages.
Blue card with the Smart Chip for security is introduced.
New offices open in Beijing, China.
Company suffers losses during the World Trade Center attacks; temporarily moves headquarters to New Jersey.
Increases focus on financial services.

Unfortunately for Wells and Fargo, their American Express business partners disagreed and did not want to extend so far so quickly. Convinced of the urgent need for express shipping and banking services in the West, and determined not to let competitors like Adams & Company get the jump on them, Wells and Fargo raised $300,000 to form another company, independent of American Express. In 1852, Wells, Fargo & Company was established and began offering the same services as American Express but on the West Coast. Although American Express was only two years old at the time, it had already become a major force in the express shipping trade and Wells, Fargo & Company hoped to duplicate this success.

New Partnerships

Trouble arose in 1854 when the Lake Erie & Western Railroad felt that American Express was taking away its light freight business without any sort of separate contract. (The Lake Erie railroad was American Express's connection from the East to the Midwest.) In response, the company formed an affiliate shipping firm, the United States Express Company, to compete in the freight market. An affiliate company is one that is separate from, but still keeps close ties with, the original company. United States Express made an agreement with the railroad, which allowed American Express to hold on to its valuable railroad connection throughout the Midwest.

In 1857, American Express continued to expand when it formed a partnership with Wells Fargo, United Express, and old rival Adams & Company to create a mail delivery service called Overland Mail Company. This new firm secured a contract with the United States Postal Service to deliver mail across the country, getting Wells and Fargo involved with the legendary Pony Express. The Pony Express was created in 1860 to provide fast mail service across the western United States. Deliveries were made through a series of horses and riders. It was a short-lived service that ended in 1861 when an expanded national railway system made deliveries faster and more economical.

The first symbol to represent American Express was a white bulldog sitting on top of a freight trunk. The guard dog illustrated the company's commitment to protecting the shipments of its customers.

When the United States became divided during the Civil War (1861-65), American Express and all its sibling companies soon became heavily involved in shipping documents, supplies, and funds to soldiers throughout the nation. The company did not choose sides, instead they did business with both the North and South. After the war ended, competition in express shipping reached an all-time high, and companies were aggressively cutting in on the contracts and territories held by American Express. Some intruders were bought off or persuaded to back down, but others had the money of powerful men behind them. Merchants Union Express Company out of New York posed a grave threat to American Express, sister company United Express, and Adams & Company. Yet American Express was the most vulnerable, and after suffering losses in 1867 it merged with Merchants to form American Merchants Union Express Company in 1868.

When American Express and Merchants combined their businesses, Henry Wells decided to retire after serving as president for eighteen years. William Fargo, his longtime friend and business partner, took over running the new firm, which later changed its name back to the simpler American Express Company in 1873.

The Legend of Wells Fargo

By the late 1800s, Wells, Fargo & Company had become an established part of American culture. Wells Fargo messengers carried letters into remote areas of the West where the U.S. mail could not reach. They also gained a reputation for safe and dependable delivery. Messengers used every means of transportation—steamers, river boats, railroad cars, freight wagons, mule trains, and Pony Express. Some messengers even traveled on skis to deliver mail. But it was stagecoach delivery that made Wells Fargo a legend of the American West. Because Wells Fargo messengers were known to deliver valuables, including gold, their stagecoaches were frequently robbed by such infamous outlaws as Black Bart and Rattlesnake Dick.

The bravery of Wells Fargo deliverymen, and the perils they faced on treks across the plains and through the Wild West, created a lasting legacy. In the twentieth century, the exploits of Wells Fargo messengers were portrayed in movies, on television, and even on the stage. A movie called Wells Fargo was released in 1937; a popular television series, Tales of Wells Fargo, aired from 1957 until 1962; and the song, "Wells Fargo Wagon," was featured in the 1957 Broadway show The Music Man.

A New Era

While Fargo was busy running American Express, his younger brother, James, was making a name for himself in shipping as well. James had founded a company for freight, or large shipments, which was called Merchants Dispatch. Merchants Dispatch had no connection to Merchants Union Express Company. In the early 1870s, James decided to expand his shipping services to Europe, which led American Express to do the same. Beginning service to Europe was a bold step for American Express, but a necessary one, if it wanted to remain a leader in the shipping industry.

When William Fargo died in 1881, James took over as president. In 1891, James took the company another step into the future by introducing American Express Travelers Cheques. With Travelers Cheques, clients could travel without worry. If they lost the specially designed checks, the company replaced them quickly, usually within a day. Travelers were also protected against theft: the signature on the cashed check had to match the signature of the person who originally bought them. This protected both the owner of the check as well as the American Express Company from losses.

As the years passed, American Express began to concentrate on its financial services and left the express shipping to its sister companies like Wells, Fargo & Company (shortened to Wells Fargo Company), which had become a legend throughout the West. It continued to grow, and remained successful even in the midst of the Great Depression of the early 1930s. Millions of people lost their jobs and their money when the stock market crashed and many financial institutions failed. Yet American Express remained solid in these dark days, with its doors open and business proceeding as usual. For its customers, this was a miracle as banks and businesses failed all around them.

President Franklin Delano Roosevelt (1882-1945) was able to rally the country through his New Deal (1932) economic policies, which put many Americans back to work. Then came the beginning of World War II (1939-45), which sent men to war and women into the factories to make weapons and planes. By the 1950s, the United States was experiencing an economic boom and Americans were buying. In 1958, since American Express had been highly successful with its Travelers Cheques, it started offering its customers a new form of non-cash funds with a small green plastic card.

Charge It!

The American Express personal charge card could be used at stores, restaurants, and hotels, and was the same as cash. Each individual client was assigned a credit limit, stating how much they could charge in a thirty-day period. Each month they received a monthly statement detailing their purchases. Spending was as simple as signing your name on small charge slips and paying your balance in full upon receiving your statement. Such was the birth of the American Express card—another ingenious way to spend money without actually carrying any. The American Express card soon became the charge card of choice among the wealthy and famous.

The popularity of the American Express card led to several different kinds of cards, including the Gold Card in 1966, which was very prestigious and for wealthier clients. Not just anyone could get a Gold Card, which made it the charge card everyone wanted. The corporate or business charge card was added in 1970, followed later by the platinum and the mysterious "black" card, which had no set spending limit, and was available to only the most elite clients.

In 1987, American Express launched its first credit card, called Optima, to compete with rivals MasterCard and Visa. The Optima was not a charge card. The balance of a charge card must be paid off each month. It was a credit card, which means that customers could pay off their balance over time; they are charged an extra fee, called interest, for borrowing the money. The fee is usually a percentage of the unpaid balance.

Don't Leave Home Without It

Beginning in 1974, American Express began advertising its charge card using celebrities who asked, "Do you know me?" The commercials, which were creative and often very funny, profiled famous people whose names were more familiar than their faces, or the opposite, where everyone knew their face but not their name. The first ad featured actor Norman Fell (1925-1998) from the television series Three's Company. Over the years, other famous faces included former Speaker of the House of Representatives Thomas "Tip" O'Neill (1912-1994), English comedian John Cleese (1939-), writer Stephen King (1944-), playwright Beth Henley (1952-), and hot tub designer Roy Jacuzzi (1903-1986). The successful ads always ended with the same line, one that became forever connected to American Express credit cards: "Don't leave home without it."

Building a Travel Empire

During the 1980s, American Express built up its travel services through a buying spree, gobbling up big travel agencies throughout the United States. There was Lakewood Travel (Colorado), BPF Travel (New Jersey), Commerce Travel (Pennsylvania), Corporate Travel International (Georgia), and further expansion into North America with HBC Travel in Canada. These purchases amounted to more than $400 million and added to the company's expanding empire.

In the 1990s American Express made the news with several high profile travel agency purchases in countries around the world, including Australia, Brazil, France, Germany, and the United Kingdom. In 1994, American Express acquired two businesses from one of the world's oldest travel agencies, Thomas Cook, paying $375 million for the two Cook units. The transaction was the largest ever in the travel agency industry.

American Express joined the cyber revolution by creating a Web site in 1995, offering its credit card users an Internet site with many travel and financial services at their fingertips. Called ExpressNet, the new service was available through America Online, the fastest Internet-based provider in the United States at the time. By 1997, American Express realized just how much travel business was done via the Internet and increased its presence through a new deal with the Travel Channel Online, part of the cable television organization. The new partnership offered a wide range of travel services, including airline and hotel reservations, to all of the Travel Channel's twenty million customers at the American Express Web site.

A New Century

At the end of the twentieth century, American Express introduced another charge card called Blue, with a "Smart Chip" to protect its users from fraud or unauthorized use. This new technology also keeps track of user's purchasing likes and dislikes, and makes purchasing, whether at stores or on-line, simple, fast, and private. By offering clients simplicity and privacy, American Express soon had another hit on its hands.

In September 2001, tragedy struck American Express and many other companies with offices in or near the World Trade Center in New York City. When terrorists attacked the World Trade Center, many lives were lost and businesses destroyed. American Express had offices directly across from the two World Trade Center towers, but was extremely fortunate that the majority of its six thousand employees in the area survived. The firm temporarily moved its offices and workforce across the Hudson River to the New Jersey shore, but planned to return to lower Manhattan in mid2002. Yet losing its offices was not the company's biggest problem; since its primary business was travel, American Express lost millions when airline travel was suspended and Americans were too frightened to resume travel for many months after the attacks. Americans did, however, return to the skies and business resumed within the year.

By 2000, American Express was 150 years old and had grown from a small express shipping company to an enormous worldwide travel and financial services company bringing in over $22 billion in revenues annually.

American Express was a company formed to ship valuables and funds within a set period of time for a prearranged price. It promised safety and security to its customers, and it always delivered. In the twenty-first century, American Express is still about securing its clients' trust—just through different means. Barges, railroads, stagecoaches, and men on horseback have been replaced by FedEx (see entry) package delivery and most of all, the high speed of the Internet, which American Express uses every second of every day to deliver services to its millions of global customers.

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